Pastrick told an FP reporter that no tightening of existing mortgage rules is needed.
“I don’t see a price bubble and I don’t see that we need the mortgage criteria tightened as is suggested in some quarters.”
Pastrick said if Ottawa heeds the calls of Canada’s big bankers to tighten mortgage lending rules, it will likely just slow the economy, “potentially triggering a domino effect ending in a slump in the housing market.”
He acknowledges that consumers are relying more on debt, but says the 150% debt-to-income level making headlines is a purely “arbitrary” number.
Pastrick said the real estate industry is an important economic driver, generating countless jobs in everything from construction and manufacturing to sales, and that if it slows down, the result will show up in declining employment.
“If you slow down the housing market that in turn slows down the economy.”
Noting that most forecasters are already calling for slower growth in 2011, he said it doesn’t make sense to add to the negative pressure by artificially pushing down demand for homes.
Pastrick also referenced prior rule changes whereby maximum insured amortizations were cut from 40 to 35 years. “I didn’t think [the market] needed it at that time either… the market was already in adjustment phase, housing sales were moving down… So there was no bubble developing at that time, nor is there one developing now.”
Central 1 Credit Union is the $10 billion central finance facility for Ontario and B.C. credit unions. It represents member credit unions who serve 2.9 million Canadians.